Originally published 4/1/14
There are some businesses that you just feel safe investing in… Coca-Cola is the first one that comes to mind.
Coca-Cola has been in business since 1886. That is 22 years before Henry Ford’s Model-T debuted. There are very few industries that change as little as the beverage industry.
Compare Coca-Cola to one of the greatest companies of now: Google. I think Google is a fantastic company. I use their products and services every day.
According to Forbes, Google has the 3rd most valuable brand in the world (Coca-Cola has the 4th most valuable). Google is fantastic at keeping up with the latest technologies. Their future is very bright. Between cars that drive themselves, and Google Glasses, who wouldn’t be excited about the future of Google?
But there is a hidden problem. Google has to keep up with technology. No one really knows what technology we will use 10 years from now, let alone in 50 years. Will Google be able to keep up its innovation and change for that long? For 10 years, I would guess yes. For 50 years? Maybe, maybe not.
Stablility vs. Change
Coca-Cola does not have the same restrictions. We may be drinking beverages that have different sweeteners or come in different bottles 50 years from now. We as consumers may demand healthier sodas and non-alcoholic beverages. But one thing I am sure of is people will still want and need beverages.
Coca-Cola has to change much less than Google to thrive for another 50 years.
When you look at businesses that have been around for 50 to 100 years, there are very few technology based businesses. The only two that come to mind are Texas Instruments and IBM. Compare this with consumer product companies with a long history like Coca-Cola, PepsiCo, Proctor & Gamble, Johnson & Johnson, Campbell’s, General Mills, and on and on.
This doesn’t mean technology stocks are bad investments. It means that companies like Coca-Cola have a much easier path to long-term success than companies like Google. I am bad at predicting the future (and I bet you are too, but if you do have a working crystal ball, let me know!).
Even Google’s name has recently changed – the company is now operating under the holding company name Alphabet.
Invest for Peace of Mind
Instead of trying to gaze into the future, invest in companies that won’t need to change much to continue their success. You won’t have to time the market or industries. Instead, you can sit back and let your investments grow slowly, year in and year out.
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